COST Costco Wholesale Corporation

By Brian Costa 

The most coveted new ball in golf arrived at Marty Rosenblatt's home just before Christmas, after he paid double the retail price for a half dozen on eBay. "Just to be the first kid on the block to have them," he said.

The block, in this case, was Mirasol, a country club in Palm Beach Gardens, Fla. that costs $130,000 to join. The ball is a Costco product that retails for $1.25.

"One of my friends said, 'How did you get them? I thought they were sold out,'" said Mr. Rosenblatt, a 68-year-old retired partner at Deloitte. "I said, 'Yeah, I have connections.'"

Costco, the warehouse retail giant, first began selling golf balls last fall, under its Kirkland Signature brand that is affixed to a wide range of products and carries discount prices. Available for $29.99 for two dozen, the balls instantly ranked among the cheapest on the market.

But what made the balls a hot item among fanatical golfers is the revelation that, by some accounts, they perform like rivals that sell for more than twice as much.

That idea sent shock waves through a billion-dollar industry, left Costco out of stock for weeks at a time and caused secondary-market prices for the ball to soar. Its popularity is threatening one of the sport's long-held consumer beliefs: when it comes to the quality of golf balls, you generally get what you pay for.

"This is just a perception killer," said Adam Beach, owner of an equipment review website called MyGolfSpy, which bills itself as the Consumer Reports of golf. "This will change the entire industry."

Making the phenomenon all the more surprising is that Costco isn't really in the golf business. It doesn't employ teams of ball engineers, researchers and designers like name-brand ball makers such as Titleist, Callaway and Bridgestone. It doesn't endorse any professional golfers.

The balls were made at a factory in South Korea by a company called Nassau Golf, which also manufactures balls for TaylorMade, one of the major equipment manufacturers. According to Nassau officials, the company had an excess supply that it sold to Costco through a third-party trader. But that supply appears to have been exhausted by overwhelming demand.

The balls have been out of stock for much of the past two months, save for a few fleeting spurts of availability. Within the past week, Costco removed the listing for them from its website. It is unclear when or even if they will be in stock again.

"We don't have a certain amount that we promise to deliver to Costco," said Shim Kwang-Suk, executive director at Nassau's ball plant in Korea. "We produce other products first and deliver to Costco if we have products left."

Costco officials didn't respond to requests for comment.

The balls, which came on the market with little fanfare, have become a source of intrigue among avid golfers.

A conversation thread about them on GolfWRX, an online community for equipment aficionados, has generated more than 5,500 replies. The ball was such a curiosity to one major equipment company that employees there cut one in half to study its interior, hoping to discern more about its origin and composition.

The makeup of the ball, which conforms to U.S. Golf Association regulations, isn't unusual. It has four layers and, like most popular golf balls, has a cover made of urethane rubber.

Nor is Costco's strategy without parallel. In the early 2000s, the grocery chain Trader Joe's created a low end of the market for another seemingly genteel product: wine. It did so by buying from a major California winery and selling bottles for $1.99. By 2012, Trader Joe's said it had sold 600 million bottles of so-called "Two Buck Chuck" -- named for the Charles Shaw label it carried -- and two of the wines won prestigious awards at international competitions.

Likewise, what's striking about the Costco golf ball is its perceived quality relative to its price.

In November, MyGolfSpy published the results of an independent test that compared the ball's performance characteristics -- distance and rate of spin, for instance -- favorably to those of the Titleist Pro V1, the perennial best-selling ball in golf. The Pro V1 is priced at around $4.00 per ball.

A Titleist spokesman declined to comment.

Other early users reported similarly good results, helping to spark a run on Kirkland balls. The upshot: balls whose primary allure was supposedly their low price are now fetching premium prices because of their scarcity.

Clinton Svoboda, a 43-year-old electrician in Iowa City, Iowa, said he bought 44 dozen balls through multiple orders on Costco's website and has since sold 40 dozen of them on eBay. He sells them for up to $40 per dozen, including the cost of shipping, which leaves him with around a $10 profit per box.

"I wasn't going to buy so many," he said, "but considering I'm making $10 per dozen, it's basically free money."

The same low prices that sparked a frenzy for the Kirkland ball may also have endangered its future. According to a Nassau executive based in Europe, the company believes the expected retail price for the ball would be closer to $45 per dozen, all costs considered.

This executive said that both Nassau and TaylorMade, its biggest client, are unhappy with the rise of the $1.25 golf ball and that the company won't sell excess supply in such large quantities again. A TaylorMade spokesman didn't respond to a request for comment.

Meanwhile, golfers wonder if or when they will see the Kirkland ball on store shelves again.

William Stalsworth, a 61-year-old retiree living in Naples, Fla., said an employee at a nearby Costco store recently told him the balls would be back in stock this spring. To hold him over until then, he paid a private seller $300 for eight dozen.

"When Costco gets them back, I'm going to buy enough to last me another 10 years," he said. "And I won't be putting them on eBay."

Min Sun Lee contributed to this article

Write to Brian Costa at brian.costa@wsj.com

(END) Dow Jones Newswires

January 19, 2017 08:47 ET (13:47 GMT)

Copyright (c) 2017 Dow Jones & Company, Inc.